Retail inflation in May cooled to a new record low of 2.18 per cent from 2.99 per cent in April, driven by falling food prices. May’s inflation level is the lowest since the series began in 2012 and remains well below the Reserve Bank of India’s (RBI) medium-term target of 4 per cent for the seventh month in a row. Retail food prices fell 1.05 per cent last from the previous year, compared with a 0.61 per cent gain in April. India Inc and the Finance Ministry have been clamouring for a rate cut from the central bank to spur growth given that consumer’s prices have remained low for a while. India’s GDP (gross domestic product) grew at a slower-than-expected 6.1 per cent in the March quarter, its slowest pace in more than two years and down from 7 per cent in the previous quarter. RBI’s next monetary policy meet is scheduled in August and analysts believe that the central bank will move on rates then, which in turn would likely make home, auto, personal and other loans cheaper. The central bank maintained status quo on interest rates for the fourth time in a row last week. The RBI is waiting to see if inflation will remain low, especially after the implementation of GST (goods and services tax) from July 1. It tweaked its language in last week’s statement to say risks were evenly balanced.

(Times of India)